"U.S. Adults Say Visa and MasterCard Should Disclose Hidden Interchange Fees" (MPC)

Poll Finds 9 of 10 Consumers Want Congress to Require More Disclosure

WASHINGTON, D.C. February 6, 2007 – Consumers overwhelmingly believe that Visa and MasterCard should disclose the $30 billion in hidden “interchange” fees they charge each year and consumers want Congress to do something about it, according to a new poll released today by the Merchants Payments Coalition (MPC) that was conducted by Harris Interactive®.

“The way credit card companies hide interchange fees is indefensible,” said Mallory Duncan, senior vice president and general counsel at the National Retail Federation and chairman of the MPC. “Interchange fees add up to twice what consumers pay in late fees but they’re kept secret and never disclosed to consumers. Consumers want that to end. They want to know how much they’re paying.

”Nine out of 10 U.S. adults believe credit card companies should disclose how much they charge in interchange fees and how those fees are set. Consumers also want Congress to require credit card companies to be more forthcoming about their policies and practices.

The poll found the following results:94 percent said credit card companies should be required to disclose to consumers the amount of interchange fees they charge.

• 93 percent said credit card companies should be required to inform consumers how interchange fees are set.
• 91 percent said Congress should require credit card companies to be more open about their policies and practices regarding interchange fees.
• 91 percent disagreed that credit card companies should be allowed to set interchange fees without notification to consumers.
• 83 percent disagreed that credit card companies should be allowed to continue to charge interchange without change to their current policy.

Interchange is a percentage of each transaction that Visa and MasterCard collect from retailers every time a credit or debit card is used to pay for a purchase. The fee varies with type of merchant, transaction and card, but averages close to 2 percent for most credit card and signature debit transactions.

According to MPC, Visa and MasterCard interchange fees totaled $30.7 billion in 2005, up 17 percent over 2004 and an 85 percent increase since 2001. The average family in the U.S. pays more than $300 each year in hidden interchange fees.

Unlike other fees that appear on the cardholder’s monthly statement, credit card company rules make it virtually impossible to inform consumers how much they are paying in interchange fees. The Harris Interactive survey found that 68 percent of U.S. adults had never heard of the interchange fee.

Release of the poll comes as interest in the interchange issue is growing in Congress. Senate Banking, Housing and Urban Affairs Committee Chairman Christopher Dodd, D-Conn., said last month that he plans to hold a hearing on interchange as part of a series of hearings looking into credit card industry practices. The Senate Judiciary Committee and a House Energy and Commerce Committee subcommittee held interchange hearings last year.

About the survey

This survey was conducted online within the United States by Harris Interactive via its QuickQuerySM online omnibus service on behalf of The Merchants Payments Coalition between January 16-18, 2007 among 2,214 adults (aged 18 and over). Figures for region, age within gender, education, household income and race/ethnicity were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents’ propensity to be online.

With a pure probability sample of 2,214 one could say with a ninety-five percent probability that the overall results would have a sampling error of +/- 3 percentage points. Sampling error for data based on sub-samples would be higher and may vary. However, that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated. The full results of the poll can be found at unfaircreditcardfees.com

The MPC, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards are fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. For further information, please visit unfaircreditcardfees.com

About Harris Interactive®

Harris Interactive is the 12th largest and fastest-growing market research firm in the world. The company provides innovative research, insights and strategic advice to help its clients make more confident decisions which lead to measurable and enduring improvements in performance. Harris Interactive is widely known for The Harris Poll, one of the longest running, independent opinion polls and for pioneering online market research methods. The company has built what it believes to be the world’s largest panel of survey respondents, the Harris Poll Online. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices, its wholly-owned subsidiary Novatris in France and through a global network of independent market research firms. The service bureau, HISB, provides its market research industry clients with mixed-mode data collection, panel development services as well as syndicated and tracking research consultation. More information about Harris Interactive may be obtained at harrisinteractive.com.

The MPC, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards are fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. For further information, please visit unfaircreditcardfees.com.

[Source: MPC]

"Unintended Consequences" (Digital Transactions, Feb, 2007)

Click here to view the February edition of Digital Transactions Magazine. Good overview on the interchange issues. Within the article, in what could easily have been a dyslexic-type comment, it was reported that the [card associations] are looking for ways to add value for the merchant.” We cannot help but adjust that quote to a more accurate representation by suggesting that the card associations are looking for ways to add value from the merchants.

Pages of interest are within the February edition are:

• Page 6 - Stewart, editor-in-chiefs commentary on merchants and interchange fees.
• Page 14 - Jane Adler reports on "Unintended Consequences"

[Source: Via "Digital Transactions"]

"EU: Europeans 'Ripped Off' by Too High Banking, Card Costs" (AP, via IHT)

"American Merchants Welcome Today's EU Report Calling for Closer Scrutiny of Interchange Fees" (MPC)

WASHINGTON, Jan. 31 - The Merchants Payments Coalition (MPC), an organization representing retailers, online merchants, and other businesses that accept credit and debit cards, welcomed today's release of a European Union (EU) policy report that calls for closer scrutiny of competition in the European retail banking sector.

The European Competition Commission report expressed concern about a number of practices the Commission believes could limit competition in the credit card business. Among the practices that worry the Commission is the "interchange fee" that banks and credit card companies charge merchants every time a credit or debit card is used to make a purchase.

"The EU Commission's conclusion that interchange fees should be the subject of further antitrust inquiries is a big win for the European merchants and consumers who are still forced to pay these hidden fees," said Mallory Duncan, chairman of the MPC and senior vice president and general counsel at the National Retail Federation. "The card companies set their fees in secret and won't even allow merchants to disclose them to consumers. Both here and in Europe, interchange remains the biggest fee consumers have never heard of," Duncan added.

The Commission report calls for closer examination and continued scrutiny of interchange fees to make sure that they are transparent and set fairly "as a result of competitive outcome."

"It is clear that the present level of interchange fees in many of the schemes we have examined does not seem justified," European Commissioner for Competition Policy Neelie Kroes said after releasing the report. "Customers already pay the cost of interchange fees, since retailers pass them on in higher retail prices, paid not only by card users but also by customers paying cash. So reducing these fees would, on balance, benefit consumers." Kroes added.

Interchange fees vary with type of merchant, transaction and card, but average close to two percent for most credit card transactions. In the United States, interchange fees totaled $30.7 billion in 2005, up 17 percent from 2004 and 85 percent since 2001.

European merchants groups have expressed concern that their expenses will increase significantly if Visa and MasterCard are allowed to charge interchange fees the same way they do in the United States. According to MPC chairman Duncan, "Europeans may disagree about a lot of things, but they appear united in their opposition to hidden interchange fees."

In the United States, Visa and MasterCard are already facing antitrust litigation arising from the way they set interchange fees. In 2006 the Senate Judiciary Committee held a hearing on interchange fees and Senate Banking Committee Chairman Chris Dodd (D-CT) has announced plans to do the same.

The MPC, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards are fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.

For further information, please visit unfaircreditcardfees.com

[Source: PR Newswire via Merchants Payments Coalition]

"EU Finds Bank Card Issuers Break Antitrust Law" (MarketWatch)

"A Lifetime of Photos on a Single Disc" (WSJ, subscription required)

30 Minute Photos Etc. featured in Wednesday's Wall Street Journal.

The month comes to a close with a feature profile on our company in the Wall Street Journal. We have long advocated that with technology should come lower prices. What use to cost consumers $5.00 is now 5-cents. 30 Minute Photos Etc. created this new photo imaging business model and has long been advocates for cutting edge initiatives; the most well known is as lead plaintiff in the multi-billion dollar merchant interchange antitrust litigation.

Click here to read the WSJ article, subscription required

[Source: WayTooHigh.com]

"Card Fees Worry Retailers" (ArgusLeader.com)

"Card Giants Tussle Over Europe System" (WSJ, Subscription required)

"EC Abandons Retailers and Backs Down on Interchange Fees" (Finextra.com)

"EU to Threaten Banks, Credit Card Firms, Draft Says" (Bloomberg)

"Congress Targets Credit Card Companies For Reform" (ConsumerAffairs.com)

Anatomy of an Interchange Charge (WayTooHigh.com)

Just moments ago, a retail customer at 30 Minute Photos Etc. presented us with their debit card; however, the electronic payment card terminal was unable to process their transaction.

This typically is caused due to a faulty magnetic strip on the card. What does this mean to retailers? The transaction had to be manually keyed into the terminal at the signature card, non-PIN rate. And there are more fees too. Because we were unable to swipe the card, a higher interchange fee was imposed. And then an even higher fee because the card terminal prompted us for the street and zip code cardholder's information. If you do not enter that information, there is an even higher fee. Because the transaction with the customer was delayed, we did not want to further inconvenience the shopper by asking for the street and zip code information as well. Just another day in the interchange fee battle.

[Source: commentary, WayTooHigh.com]

Citibank® Debit MasterCard's® Unfriendly "Journey." (WayTooHigh.com)

Although Citibank® is not the only financial institution offering creative gimmicks to incentivise cardholders to use their debit cards at the much higher credit card interchange rates, their program is a portrait of how their cartel is reaping billions of dollars at the expense of merchants and consumers who pay supra-competitively priced interchange fees.

We just heard of a new Citibank Debit MasterCard® program called: "Life is a journey. Bring your companion." How it works: Make three purchases for more than $30 each during February and you can receive a complimentary companion airline ticket. Great deal - $90 in purchases and a free airline ticket?

Here is the catch, according to the mailed solicitation: "when you make a purchase press 'credit' and sign. That's all there is to it."

What is not mentioned is that even though cardholders choose to complete the transaction at a typically much higher signature card interchange rate, the funds are still instantly vacuumed from their bank account. The banks get the cash instantly and the merchants are also taken on a ride - they are forced to pay much higher percent-of-sale interchange rates. Programs like this may be what Senator Christopher Dodd (D- CT) had in mind when last week he addressed interchange issues during a Washington hearing.

The Citibank N.A. offer makes this program appear so simple, use your debit card as a credit card, charge more than $30 for three separate purchases and you receive a complimentary companion ticket. It is no wonder the credit card association's and their member banks are bilking retailers so much, the fees paid to reward programs is big business.

According to an article in Digital Transactions, a report by Diamond Management & Technology Consultants identified that rewards account for 44% of total interchange costs.

Even with this travel program, don't pack your bags so quickly. In tiny magnifying glass-sized print, cardholders are advised that "you will receive a registration package for a companion ticket within 150 days of the end of the promotion" [5 months afterwards].

The solicitation explain that you "debit card means no interest. Although your debit card looks like a credit card, it acts entirely differently. Purchases are taken directly out of your checking account so there's no interest to pay, ever." What is missing is that when you comply with the bank's requirement that you force the merchant to accept your card at the much higher signature card rate, you too are faced with paying an additional hidden tax. If the banks believed in full transparency, they would explain that retailers are forced to pay higher fees.

How can they get away with such unbridled greed?

When you operate a cartel that controls 80% of the market and you set fees by agreement, you can do exactly that.

[Editors note: MasterCard and Citibank N.A. are among the named defendants in the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation in which 30 Minute
Photos Etc. is the lead plaintiff].

[Source: WayTooHigh.com]

"Merchants Protest Credit-transaction Fees" (The Sun News)

"Visa and MasterCard made $30.7 billion in 2005 by charging merchants a percentage of each credit card transaction. The National Retail Federation also estimates that those earnings will climb to the $40 billion range for 2006, and the retail industry is joining forces with politicians to discuss restrictions on credit card companies..."

[Source: The Sun News]

"Merchants Applaud Congressional Call for Disclosure from Credit Card Industry" (MPC)

WASHINGTON, Jan. 25 /PRNewswire-USNewswire/ -- The Merchants Payments Coalition (MPC) Legislative Committee Chairwoman Jennifer Hatcher today issued the following statement based on comments from Senator Christopher Dodd (D- CT), Chairman of the Senate Committee on Banking, Housing and Urban Affairs, at this morning's Hearing titled "Examining the Billing, Marketing, and Disclosure Practices of the Credit Card Industry and Their Impact on Consumers."

"We applaud the efforts of Senator Dodd (D-CT), who called for heightened scrutiny into the credit card industry and will be holding a series of hearings in coming months to investigate further among other topics the practice of hidden credit and debit card 'interchange fees.' The credit card companies have long profited from placing hidden fees and practices on unsuspecting merchants and consumers.

The interchange fee is the biggest fee consumers have never heard of and accounts for more than the total of all other consumer fees such as late fees and over-the-limit fees.

Last year, Visa and MasterCard generated more than $30 billion in credit and debit card interchange fees -- a fee set in secret by Visa and MasterCard and imposed on merchants and consumers by the credit card industry and completely hidden from consumers."

The MPC, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards are fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees. For further information, please visit http://www.unfaircreditcardfees.com

[Source: via Merchants Payments Coalition news release]

Summary: Briefing on Interchange Issues (WayTooHigh.com)

This marks our 625th posting on WayTooHigh.com - The Credit Card Interchange Report.

The daily news and commentary updates are edited by entrepreneurs who know first hand about all the issues, as we are also the lead plaintiffs in the interchange battle (the first to file, back in June, 2005) .

Earlier today, Senator Christopher Dodd (D- CT) provided an opening statement during hearings in Washington that including mention that the "costs associated with these fees are expected to be between $30 and $40 billion this year alone."

As background for our growing universe of international readers, we are providing the following summary as an overview of the interchange fee issues impacting consumers and retailers. This informational web site was created to provide news and commentary updates only. None of the information posted on WayTooHigh.com is intended to constitute legal arguments; it reflects only the opinions of its co-editors and not of any other plaintiffs or other parties involved in the merchant antitrust litigation. The information is not guaranteed to be correct, complete, or current. We make no warranty, express or implied, about the accuracy or reliability of the information posted by WayTooHigh.com or at any other Web site to which this site is linked.

Summary

Interchange fees are the hidden fee collected by Visa® and MasterCard®-issuing banks every time a Visa or MasterCard cardholder makes a purchase with their credit or debit card. Annually, these issuing banks collect interchange fees totaling more than $30 billion in the U.S. alone. Although the Visa and MasterCard-issuing banks are ostensibly in competition with one-another, they do no compete on the interchange fees they charge. Instead, they set interchange fees collectively, which is a clear violation of U.S. Antitrust laws.

Along with millions of other merchants, we believe that, absent collusion between the issuing banks, interchange fees would be much lower. The average rate in the U.S. is 1.7%, in Australia it is .55% and in the UK it is just .7%. In Canada, the interchange fee for PIN-based debit cards is zero, just as are charges for check writing, although there are significant costs to clear and process paper checks. Our hope is that the judge will rule that "fixed interchange" is illegal, allowing for market competition between the issuing banks that will result in lower interchange fees. This will benefit all U.S. merchants and consumers (lower merchant costs translate to lower consumer prices). We are also seeking damages for the harm already inflicted on merchants by Visa, MasterCard, and their issuing banks in the form of the existing, artificially-high interchange fees.

[Commentary: WayTooHigh.com]

Opening Statement by Senator Christopher Dodd (D- CT), Chairman of the Senate Committee on Banking, Housing and Urban Affairs (U.S. Senate Website)

OPENING STATEMENT OF CHAIRMAN CHRIS DODD - HEARING TO EXAMINE THE BILLING, MARKETING, AND DISCLOSURE PRACTICES OF THE CREDIT CARD INDUSTRY, AND THEIR IMPACT ON CONSUMERS

See excerpt from opening statement below:

...But I would like to put the credit card industry, issuing banks and card associations on notice. If you currently engage in any business practice that you would be ashamed to discuss before this Committee, I would strongly encourage you to cease and desist that practice. Irrespective of the current legality of such practices, you should take a long, hard look at how you treat your customers, both in the short term and the long term.

And lastly, I would be remiss if I did not mention one issue likely not to be explored today-- credit card interchange fees. These fees are imposed on merchants and consumers by banks and card associations when a credit or debit card is used to pay for a purchase. Interchange fees are growing exponentially– and the costs associated with these fees are expected to be between $30 and $40 billion this year alone. These opaque fees, assessed on merchants, are passed on, in part or whole, to consumers who have no knowledge or understanding that a fee is even a part of the cost of bread or milk, or any other consumer product.

I believe that this is another area that this Committee should examine as part of the series of hearings on credit cards.

[Via U.S. Senate Hearing, click here for link]

"Dodd Promises Scrutiny on Credit-card Industry" (MarketPlace)

Reminder: EU Credit Card Decision Expected Next Week (WayTooHigh.com)

The EU Commission decision on fees for credit-card operations is expected to be made public on January 31, 2007.

[Source: WayTooHigh.com]

U.S. Senate Banking Committee Hearing (WayTooHigh.com)

Click here for information on the U.S. Senate Committee on Banking, Housing, and Urban Affairs Titled: “Examining the Billing, Marketing, and Disclosure Practices of the Credit Card Industry, and Their Impact on Consumers.”

[via U.S. Senate Hearing Schedule]

"Senate Committee to Examine Credit-card Industry" (MarketWatch)

Shouldn't Technology Lower Interchange Costs? (WayTooHigh.com)

We have long advocated that technology increases efficiencies and helps lower costs. That is unless you have a service that is controlled by unbridled collusion and (allegedly) illegal price-fixing by agreement.

Another example is our newest service launched today. Just one year ago, we were charging up to $5.00 to scan a single photograph. Then, with the application of new Kodak imaging high-speed scanners and Kodak Capture software, we designed a new flat-rate scanning service for just $49.95 to scan up to 1,000 photos, instantly! That was fast and garnered great media buzz and excitement at the recent Consumer Electronics Show educational panel which we addressed.

We mentioned that like most services today, everything must be effortless, instant and inexpensive. That raises the question of why our independent photo specialty retail and national online boutique photo service can employ technology and entrepreneurial smarts to create an entirely new market and share extraordinary saving with our customers, while the credit card association's continue to raise their fees?

For us, 1,000 photo scans for $49.95 was old news. Now, we just launched ScanMyPhotos.com for unlimited photo scanning where you "fill-the-box" and get prepaid round-trip delivery too for just $99.95. More info, click here.

If we can continually create new cost savings and efficiently help consumers, why can't Visa and MasterCard?

[Source: commentary, WayTooHigh.com]

Forcing Credit Card "Convienence" Fees (WayTooHigh.com)

Imagine if 30 Minute Photos Etc. tacked on a 2% or 2.5% "convenience" fee for all our ecommerce and retail customer charge transactions? This would be in violation of our agreement with Visa® and MasterCard®, as we are disallowed from adding a surcharge to cover electronic payments. [See MasterCard's 268 page "merchant rules manual"].

However, while retailers are precluded from passing on the interchange fee, municipalities regularly do exactly that. When you pay property taxes with a credit card, the cities force people to pay an extra fee. If you use a debit card, the funds are instantly deducted from you account, yet the municipalities still get that added revenue.

Take a look at three examples:

Orange County, California

Lynchburg, Virginia

Lexington County, South Carolina

[Source: WayTooHigh.com]

Feedback From Franchisee at Giant Fast Food Chain (WayTooHigh.com)

It wasn't just our presence at CES that drew cheers from entrepreneurial supporters, just today we heard from another important customer. A very sweet lady brought in a photograph to be restored and then explained how much she has enjoyed reading about our many years of civic activism and appreciation for our role as class representative in the merchant interchange battle against Visa® and MasterCard®.

Her own experiences were consequential and added more fuel to our quest because she is a franchisee - owning several fast food restaurants with one of the world's largest chains. According to her, the average sale at her company is about $3.50 and she is now forced to accept all major credit cards. Some key points from our discussion were that the availability of credit cards have led to no appreciable increase in sales and she had to hire an extra bookkeeper just to track all the statements and charges from the card associations. She seemed very connected to the fast food restaurant industry and mentioned that it is not just her, but other franchisees and owners who cannot tolerate the cards; it is too costly. Her staff is trained to ask if it is a debit or credit card, but often she is forced to pay the higher signature card rates anyway.

She explained the acceptance of credit cards are much like "green fees" at a golf club; it is something that they have to pay but provides little benefit, especially because most patrons are spending just a few dollars and have cash anyway. While Visa and MasterCard will challenge these statistics, take it from a franchisee owner who knows her market and business.

But, it is not just fast food, as she mentioned that a local service station is regularly accepting charge cards for items as small as a pack of gum. Take a look at today's Wachovia and Bank of America quarterly results if you want more insights into just how profitable interchange fees are.

[Source: WayTooHigh.com]

"BofA Profit Surges on Card Growth" (The Street.com)

BofA Quarterly highlights via Edgar online

• Debit card revenue increased 23 percent to a record $1.91 billion.
• During 2006, the company acquired and successfully integrated MBNA Corporation, making Bank of America the largest credit card issuer in the U.S. and U.K.
• Fourth quarter net income for Global Consumer and Small Business Banking rose 44 percent to $2.53 billion from the year earlier period. Revenue in the period increased 46 percent to $10.63 billion, driven primarily by higher credit card income, including the addition of MBNA, and service charges.

"Visa Awaits EU Report on Fees" (WSJ, subscription required)

(repost) "Credit Card Companies Fear 'Perfect Storm'" (ConsumerAffairs.com)

As background, repost, May 3, 2006, via ConsumerAffairs.com

"The Corrosive Siege Over Signature-Card Interchange" (Digital Transactions)

(repost) "Millions of Retailers Across the Nation Enter Battle Against Banks' Credit Card Associations" (CSN)

As background, repost from Sept 30, 2005. via Convenience Store News.

Confusing Debit Cards (WayTooHigh.com)

After Tuesday's front-page Wall Street Journal article on debit cards, we were concerned that cardholders might not be familiar with the varied schemes employed by Visa® and MasterCard®. The card designs are increasingly more confusing and leading towards misidentifying PIN vs. Signature cards.

Just moments ago, a customer presented us at our retail photo center (30 Minute Photos Etc.) with one of the most disingenuous debit card designs yet. The word "debit" was nearly invisible and imprinted within the hologram. That trick is something we have been familiar with, but it was the other placement that elevated our dismay. The word "debit" was vertically imprinted on the center on the left side of the card in tiny lettering and in black which was nearly indistinguishable from the other graphics on the card.

Why is this so important?

The card associations are encouraging consumers to use debit cards, which instantly deduct funds from their bank account, but then use creative marketing and card designs to force merchants to accept the electronic payments at the much higher percent-of-sale rates. The banks' risk is limited; they receive immediate payment, yet charge U.S. merchants what amounts to among the highest interchange rates in the world.

Click here for more info.

[commentary: WayTooHigh.com]

"The No. 2 Credit Card Issuer Is Banking On Big Expansion Plans" (Investor's Business Daily)

"Visa Chides EU on Credit-Card Fees Plan" (BusinessWeek)

"As Credit Card Fees Climb, Merchants Push PINs" (WSJ, Subscription required)

Robin Sidel reports in today's WSJ (Jan 16, p-1) about the interchange fees for credit and debit cards and how retailers are pressing consumers to use PIN cards. However, the banks are using marketing campaigns and promotions to counter by incentivising cardholders to use signature cards so they can enter contests and earn rewards.

Read more.

[Source: Via WSJ, Subscription required]

"EU Move to Ban Card Fees Would Hurt Consumers, Visa Europe Says" (BBJ)

According to Hungary’s leading English-language business weekly, Budapest Business Journal, Visa Europe's CEO commented to journalists in Brussels that they must resolve legal questions this year about the fees known as interchange.

The article refers to Competition Commissioner Neelie Kroes vowing last year to fine card companies unless they changed their business practices. In our opinion, pawning off their legal liabilities onto the public through IPO's and other games, like covertly posting interchange rates on its website, and limiting interchange fees at the gas pumps are all window dressing. The real issue remains that the two leading card associations stand accused (by us and many others) of anti competitive and illegal price-fixing by agreement violations.

[Source: WayTooHigh.com via Budapest Business Journal]

"CES Panelist Calls for Interchange Oversight" (Supermarket News)

"Credit-Card Solicitations Are Full of Naughty Surprises" (MarketWatch)

Excerpt: "Banks are counting on the fact that they will get increased interchange income from merchants, which can run as much as 5 percent per transaction..."

(Source: MarketWatch)

Lowering the Interchange Fee Cap at the Pumps? (WayTooHigh.com)

Was it an arbitrary number MasterCard® used to identify the interchange fee cap at the pumps last fall? Motorists were limited to paying fees on only the first $50 per fill-up at the pumps. But, as gas prices have plunged to a 19-month low, will the card association recalibrate its pricing matrix and lower the cap at the pumps?

And, since this action presents more proof that they recognized interchange fees cost a fractional amount of what is forced on retailers, placing a limit on gas station fees raises additional questions. Such as, why are interchange fees at Cartier and high-end boutiques not also limited too? It seems that whether it is a tank of gas or fine jewelry, the same windfall profiteering and price fixing assertions can be made.

Will we now see an interchange fee cap of $25 per fill-up, or less?

[Source: commentary - WayTooHigh.com]

Why Interchange Fees Concern Retailers and Consumers (commentary: WayTooHigh.com)

Having just returned from the International Consumer Electronics Show in Las Vegas, there were several instances where I felt more like a rock star than an entrepreneur at the world's largest consumer technology trade event. There were lots of smiles and thumbs-up from those who were familiar with my role as lead plaintiff in the merchant interchange litigation. Business owners and even consumers were in our camp. Several people I ran into shared their own horror stories.

For me, the point of excessive interchange fees hit home during Michael Dell's Tuesday keynote presentation at the Venetian Hotel. At one point, he had "Doctor Evil," the character from the Austin Powers films appear on stage after a 30-year deep freeze. Doctor Evil showed Dell Computers' founder his 30-year-old computer and wanted to get his "crap" off the antiquated machine; Dell was introducing new products to preserve files stored on older model computers. I couldn't help but draw several analogies about credit card fees and the differences in technology and higher fees than from three decades ago when antiquated manual card imprinters were used.

As a speaker at CES, I addressed the future of the photo imaging industry, but throughout the show, many people I met were familiar with our litigation against Visa®, MasterCard® and its member banks. CES was not a very friendly place for the card associations, especially because it united retailers and ordinary shoppers together; both are impacted by these fees.

One observation I raised was how ironic it was that the nation's largest trade show just celebrated its 40th anniversary - it was founded in New York City in 1967. While the bulk of the products promoted at the show will be purchased with Visa or MasterCard (they control 80% of the market), the two leading card associations operate in a 1960's type-fee structure. Back then we were in a paper economy, today with technology, everything is digital, yet Visa and MasterCard's price structure is based on costs from 40-years-ago.

Click here for previous "Credit Card Interchange Fee Draw Criticism and Concern at CES" press release.

Overview of Interchange Issues:

• Interchange fees have more than doubled in the last 10-years.
  
• Few customers know about interchange fees because it is virtually impossible for merchants to tell customers what the exact fee is.
  
• Every consumer pays for these hidden credit card fees, even cash customers because the cost is built into every product - a gallon of milk bought with cash by a mom is also paying to award premium signature card holders' bonus mileage to Europe.
  
• Interchange fees are one of the worst and most unfair fees paid by American consumers - it's more than six times what people paid in ATM fees.
  
• Visa and MasterCard control an 80% market share of the card market and control a system that is anti-competitive.
  
• Visa and MasterCard threw a bone to service stations and motorists last fall, after the peak summer driving season by capping fill-up interchange fees at $50. This was a hollow gesture and not very genuine, especially as fuel costs have recently subsequently plunged.
  
• Huge profits: Even though the actual cost to process a $1 transaction is virtually the same as that of a $10,000 transaction (buy a soda or a Cartier watch), the interchange fee is based on a percentage of the total. Even Realtors lowered their take when housing prices soared. The interchange fees are far higher than the actual cost o the transaction they are meant to pay for. The technology used to process credit card transactions are today more efficient and less expensive.
  
• Why are interchange rates higher in the U.S. in most other industrialized nations? U.S. interchange fees are close to 2%, while other countries, like the UK are typically 0.7% and Australia averages 0.55%.
  
• Did you know that merchants are forbidden from disclosing to consumers the fees that are charged?
  
• Behind closed doors, Visa and MasterCard meet to increase these anti-competitive hidden fees. We understand that these price-fixing practices are in violate antitrust laws.
  
• Few things are more anti-competitive than the credit card market - virtually every other marketplace lowers prices because of competition.
  
• Study the market dynamics of other counties with significantly lower interchange rates to understand that the banks and card association are still doing well and they have not experienced disruptions in transaction handling processes, despite lower rates.
  
• The banks which make up Visa and MasterCard have colluded to set these fees which in any other industry would be a clear violation of federal antitrust laws
  
• With a new consumer-friendly House, it will be interesting to see what actions Congress and the Senate might take in the coming months. [The Senate may launch a hearing of its own and we certainly would welcome an opportunity to share our retail and ecommerce experiences].
  
  [Source: WayTooHigh.com]

"Polish Watchdog Gets Tough on Credit-card Fees" (EurActive.com)

"Competition watchdog OCCP has declared the fees that banks charge on transactions made with major credit cards as unlawful, in an effort to reduce costs for consumers."

"Hidden Fees Bring Big Profits to Credit Card Companies " (MPC)

Credit Card Interchange Fees Draw Criticism and Concern at CES (WayTooHigh.com)

Visa and MasterCard seen as major culprits in predatory credit card processing fees and practices

January 9, 2007, (Las Vegas, NV)—Credit card interchange fees and abusive practices were discussed at the 40th annual Consumer Electronics Show being held in Las Vegas, NV this week.

At the "Photography Fights Back!" panel discussion today, Mitch Goldstone, the president and CEO of 30 Minutes Photos Etc., discussed the challenges that face many business owners and consumers who use credit cards for purchases and payments. Interchange fees are a percentage of each transaction that Visa® and MasterCard® member banks collect from merchants every time their credit or debit cards are used to pay for a purchase.

The fee varies with the type of merchant transaction but the average is nearly 2 percent for most credit card purchases. Goldstone, in his comments, called on members of the house and Senate to seriously consider the potential benefits of oversight and regulation of these fees.

Speaking from the Venetian Hotel, where educational sessions for the Consumer Electronics Show is taking place, Goldstone commented, “What Visa and MasterCard are doing hurts the merchant, the consumer and in reality, the country. I find it ironic that we are here at the 40th anniversary of the Consumer Electronics Show and that the bulk of the products here will be purchased with credit cards that operate through a 1960’s fee structure.”

In 2005, U.S. consumers paid more than $30 billion in interchange fees when using MasterCard and Visa cards, double the amount they paid in ATM fees and late fees combined. Another odd aspect of interchange fees is that the United States pays the highest rate despite having the most advanced technology. For example, United Kingdom consumers pay roughly half the U. S. consumer rate, and Australian consumers pay a third. A recent survey also discovered that the United States and Canada are the only countries that have seen recent increases in interchange fees. Fees in the U.S. are among the highest for any industrialized nation and more than double many other countries.

“It’s no coincidence that U.S. consumers pay the highest rate as they are the most active card users. Other countries have recognized that the interchange fee is a hollow, almost punitive, processing fee that doesn’t cover any provided service,” said Goldstone, who is a lead plaintiff and class representative in the multi-billion dollar antitrust class-action litigation against Visa and MasterCard. “It made sense in the 60s, 70s and maybe even the 80s when paper transactions and human interactions and approvals were the norm. Today, the same transactions are approved and funds delivered within seconds, therefore there is no need or rationale for the fee.”

In an example of how interchange fees function, imagine a consumer making a $100 purchase with a credit card. For that $100 item, the retailer would get approximately $98. The remaining $2, known as the merchant discount or interchange (which is actually a fee), gets divided up. About $1.75 would go to the card issuing bank and $0.25 would go to the retailer's bank. Under the current structure, these fees are an unnecessary tax on merchants, consumers and burden economic growth.

Goldstone is also co-editor of WayTooHigh.com – The Credit Card Interchange Report which provides international daily news and community updates on interchange issues.

[Source: WayTooHigh.com]

"MasterCard [and Visa] Reaches Federal Settlement" (The Journal News)

New House Committees (WayTooHigh.com)

Welcome to the incoming House Financial Services Committee Chairman Barney Frank, D-Mass.

[Source: WayTooHigh.com]

"Credit Card Firms Slam RBA Review" (The Sydney Morning Herald)

Preparing for CES (WayTooHigh.com)

Next week we embark on what has become the largest trade show in the U.S.

30 Minute Photos Etc. is scheduled to address the International Consumer Electronics Show on Tuesday at 10:00 a.m. at the Venetian Hotel. Click here for more info.

[Source: WayTooHigh.com]

"Market Structure and Credit Card Pricing: What Drives the Interchange?" (Federal Reserve Bank of Kansas City)

Abstract (50 page report): "This paper presents a model for the credit card industry, where oligopolistic card networks price their products in a complex marketplace with competing payment instruments, rational consumers/merchants, and competitive card issuers/acquirers. The analysis suggests that card networks demand higher interchange fees to maximize card issuers' profits as card payments become more efficient. At equilibrium, consumer rewards and card transaction volume also increase, while consumer surplus and merchant profits may not. The model provides a unified framework to evaluate credit card industry performance and government interventions."

[Source: Via Federal Reserve Bank of Kansas City]

"Morgan Stanley to Spin Off Discover" (via AP)

Advisory

Mitch Goldstone, President of 30 Minute Photos Etc. is scheduled to address the International Consumer Electronics Show in Las Vegas on January 9, 2007.

Click here for session details.

MasterCard's® Planned Interchange Fee Cap For Gas Retailers (WayTooHigh.com)

The news last September seemed monumental, but what happened since the press release?

Whatever happened to the heralded announcement by MasterCard Worldwide® of their response to growing scrutiny of windfall profiteering at the gas pumps? Did Visa® ever follow along too?

From news reports, the second largest card association was planning to limit interchange fees for U.S. gas purchases. Overseas, we see that the company is also planning to lower rates by 60% for debit card transactions, and in the States, sort of lower rates at the pumps too. All this helps demonstrate that interchange fees are way too high.

According to Digital Transactions (Sept 5, 2006) "while the announcement gives no specific effective date for the cap on gasoline interchange, a MasterCard spokesman says the drop-dead date is April 1, 2007."

We wonder what might occur should there be another energy pricing crisis in the States and should gas prices rise again, how will MasterCard respond? Will they hold the cap at $50? Either way, the gimmick is still irrelevant and disconnected from the reality that most motorists' gas tanks cannot hold more than $50 anyway.

Out of Touch (WayTooHigh.com)

"MasterCard Initiative: Priceless?" (Convenience Store News)

"MasterCard Offers Concessions In Interchange Fee Battle" (ConsumerAffairs.com)

"MasterCard Says to Disclose More Merchant Fees" (via Reuters)

[Commentary: WayTooHigh.com]

"Reserve Bank of Australia to Review Card Payment Systems (Banking Business Review)

Why Credit Card's Can Be Scrooges During The Holidays (commentary: WayTooHigh.com)

Actually, the charge card associations and their member banks can be scrooges year-round, according how we interpret "The 12 Ways of Giving" Motley Fool profile today.

As Dan Caplinger for TMF (Dec 14) reported, during the holiday season it can be particular oppressive to non-profit charitable organizations which accept electronic payment donations. They can pay upwards of 5% in interchange fees when benevolent donors present their cards.

TMF Abstract: "...Keep your credit card in your wallet. Many charities accept donations by credit card in order to facilitate giving by donors. However, keep in mind that charities usually have to pay the resulting merchant interchange fees, which can be as high as 5%. Of course, using a credit card to give is better than not giving at all, but better still is a gift by cash or check."

Click here for a recent WTH commentary on how the banks can charge non-profits upwards of 5% to process electronic payments.

[Source: Commentary, WayTooHigh.com, via The Motley Fool]

"Credit Card Firms Slam [AUS] Reserve Bank Over Planned Payments Review" ('The West Australian)

"MasterCard's Fee Cut Under EU Anti-trust Scrutiny" (EurActiv.com)

Anatomy of How Technology Should Reduce Costs (commentary: WayTooHigh.com)

With the holiday retail season upon us, millions of retailers are experiencing a similar scenario. Technology has created new opportunities to enhance service, speed and product offerings while significantly lowering prices. While lowering our prices, we pay more in interchange fees, which translates into a $30 billion annual hidden tax on retailers and consumers.

The below two examples can parallel similar experiences from other retailers in many other industries too. Next month, we will be addessing technology issues at the International Consumer Electronics Show in Las Vegas.

$5.00 PHOTO SCANNING NOW JUST 5-CENTS

At 30 Minute Photos Etc., we charged $5.00 to scan a picture; today it is as low as 5-cents - pay just $49.95 to scan a shoe box of photos (up to 1,000 snapshots) and the orders are completed in minutes. After a Popular Photography article on our business (July, 2006, "Scanning made cheap and easy - Got Prints?"), orders are now mailed from across the country or literally wheeled into our retail store in Orange County, Calif. One customer brought in 19,000 pictures on a Saturday and picked it up Monday morning. That is technology and efficiency for you!

PHOTO GREETING CARDS ARE READY IN MINUTES AND COSTS A FRACTION OF THE LABOR AND PRICE FROM JUST A FEW YEARS AGO

Another example of how technology has created new opportunities for retailers and saved money and hassles for consumers are holiday photo greeting cards. In 1990, when we founded the company, we had nearly a 50% waste ratio to design and prepare a photo greeting card. Orders were ready a few days later and the cost was about 5 times today's rate. Today, with orders coming in from across the country and at retail on our photo kiosks, the wait time is minutes. The waste factor is zero - unless someone misspells a name on the card. The quality from 16-years ago to today is embarrassing; back then, there was a huge error rate - today, every order is extraordinary.

With completed orders being mailed back nationwide within minutes, the price is also something to note. Today the photo greeting cards are as low as 38-cents.

Partly because we provide special services to military families, this is among our customers' most popular photo greeting card designs this year.

[Holiday Photo Greeting Card Sample from 30 Minute Photos Etc.]

This posting is not designed to be commercial, but informative and explain how technology is speeding up everything and lowering the costs .... except seemingly for merchant interchange rates. Keep in mind, our business is not part of a giant cartel with 80% market power and unbridled control. We have lots of competition, and while we use technology to create new efficiencies, products and lower prices, the credit card associations are continuing to raise rates. While they just announced a planned 60% reduction for debit card use in 2008 overseas, our rates regularly climb.

If technology is helping to lower the costs of business, why are the card associations continuing to raise their rates while also adding new schemes to force merchants to pay more.

[commentary: WayTooHigh.com]

Seven Dollars vs. 55-cents (WayTooHigh.com)

This afternoon, a customer's order at our Orange County, Calif retail photo center totaled $398.19 and they presented their Visa® debit card. Twice it was not accepted. The transaction failed.

Why?

We understand that many ATM cards have a daily usage limit of $300. So, rather than creating a hassle, we immediately reswiped the card as a signature credit card. However, the customer was concerned - they knew there were adequate funds available and it was an embarrassing and uncomfortable situation. She even mentioned that retailers pay a higher fee for credit cards even though funds are immediately withdrawn from the cardholders bank account. [Little did she know we are the lead plaintiff in the merchant interchange antitrust litigation and co-edit WayTooHigh.com - The Credit Card Interchange Report].

Doing a little math proved her right. Rather than costing 30 Minute Photos Etc. a flat fee of 55-cents to process the PIN-based ATM card transaction as a debit card, our actual interchange payment cost was closer to $7.00.

Even if a customer has thousands of dollars in the bank, retailers are forced to pay higher signature-based interchange fees.

[WayTooHigh.com]

"Santa’s Not the Only Surprise This Season" (NACS)

ALEXANDRIA, VA – With all the hidden credit card fees that must be paid, a modern version of the popular Christmas tune the “The Twelve Days of Christmas” should be renamed the 12 “daze” of Christmas.

For instance, PNC Financial Services Group’s annual Christmas Price Index that calculates giving true loves every item in the cherished “Twelve Days of Christmas” – from 12 drummers drumming to a partridge in a pear tree – would cost more than $75,000 in 2006. However, the bank conveniently leaves out the hidden cost of credit card interchange fee that consumers pay, which adds upwards of $1,500 to this fabled purchase.

Interchange is a percentage of each transaction that Visa and MasterCard banks collect from merchants every time their credit or debit cards are used to pay for a purchase. The fee varies with type of merchant, transaction and card, but averages close to 2 percent for most credit card transactions.

In 2005, U.S. consumers paid more than $30 billion in interchange fees when using MasterCard or Visa cards, double the amount they paid in ATM and late fees combined.

Shockingly, interchange rates vary significantly by country, and U.S. rates are among the highest in the world, despite having the most-advanced technology infrastructure to process transactions. For instance, in the United Kingdom, consumers hoping to play “Father Christmas” pay interchange rates roughly half of those in the United States.

“The Grinch can’t hold a candle to the credit card companies,” said NACS Vice President of Government Relations Lyle Beckwith. NACS is a founding member of the Merchants Payments Coalition (MPC), a group of about 20 trade associations representing the retail community that is fighting for a more competitive and transparent card system that works better for consumers and merchants alike.

The cost of items referenced in “The Twelve Days of Christmas” increased about 3 percent over the past year, according to the PNC survey, while interchange fees increased at a rate nearly six times greater – 17 percent, according to the MPC.

“It is outrageous how much Visa and MasterCard and their member banks are needlessly saddling consumers with these hidden fees that grow every year,” added Beckwith. “Among other things, these fees are fueling the flood of ‘pre-approved’ credit card come-ons stuffing consumers’ mailboxes, and making shredders a popular Christmas gift for consumers concerned about identity theft.”

“Visa and MasterCard rules effectively require that interchange be built into prices and make cash discounts all but impossible, so these fees take money out of consumers’ pockets regardless of how they pay,” Beckwith added.

Given Visa and MasterCard’s refusal to fully disclose operating rules that govern interchange, Beckwith added one hope: “Perhaps these credit card companies’ resolution for 2007 should be that they provide greater transparency as to why U.S. consumers pay more than $30 billion a year in interchange fees, lining the companies’ pockets and funding everything from junk mail to marketing gimmicks that benefit neither consumers nor retailers.”

NACS, the association for convenience and petroleum retailing, is an international trade association representing more than 2,200 retail and 1,800 supplier member companies. The U.S. convenience store industry, with over 140,600 stores across the country, posted $495.3 billion in total sales in 2005, with $344.2 billion in motor fuels sales.

[Source: National Association of Convenience Stores]

The National Restaurant Association will release its 2007 Restaurant Industry Forecast today at the National Press Club in Washington, D.C. The association will outline policy issues such as credit card interchange fees.

Watch the Webcast live! on 12/12/06 at 10 AM EST.

{Source: via National Restaurant Association, U.S. Newswire release]

More U.S. Cities in Interchangeable Parking Jam (WayTooHigh.com)

While New Hampshire and Massachusetts are facing parking meter quagmires, California has credit card accepting meters already in place.

Last weekend, while on the Sunset Strip in West Hollywood, we noticed that the famed landmark street was shadowed by Visa® and MasterCard® accepting parking meters. For as little as 25-cents you can rent a space for 15 minutes on The Strip. We wonder whether West Hollywood knows what Boston and Manchester N.H. understand about how interchange fees eat into their revenues?

[photo caption: Charge card accepting parking meter on the Sunset Strip, Saturday, Dec 9, - WayTooHigh.com]

For typical merchants, the minimum charge / debit card fee on a 25-cent transaction could be nearly the entire amount and in other cases much, much higher. Did the 15-minutes of fame our car experienced on the Sunset Strip end up costing the municipality while helping to enrich the banks and card associations?

The Canadian-based company name imprinted on the back of the receipt (left) is Digital Payment Technologies. We visited their website but could not find any information on how municipalities are handling the interchange fees or what those fees are expected to be for micro-transactions.

New Hampshire Parking Meters Accept Plastic (via Union Leader)

"[Boston] Halts Use of Credit Cards at New Meters" (via The Boston Globe)

Boston Strangled by Interchange Rules (WayTooHigh.com)

[Source: WayTooHigh.com]

Global Interchange Fee Perceptions (WayTooHigh.com)

The Sydney Morning Herald's headline (Dec 11) "Credit card firms slam RBA review" suggests that the Reserve Bank of Australia's decision to review interchange fees is "unbalanced." Right they are. If one on hand, MasterCard Europe® can announce plans to lower rates on debit cards by 60%, why then is the giant card association fighting another nation's eagerness to have equal balance and demand these fees be cost-based?

Background:

1. Sixty-percent Rate Cut in 2008 by MasterCard Europe (Commentary, WayTooHigh.com, via WSJ)
2. "MasterCard Europe reportedly said that it would lower debit card transaction fees by 60 percent in 2008, as the Single Europe Payments Area regulations kick in. European regulators are still investigating if the payments company had violated antitrust laws by setting interchange fees for cross border debit card transactions." [The Asian Banker]

[Source: WayTooHigh.com via Sydney Morning Herald]

"RBA to Review Credit, Debit Card System" (The Age)

Retailers Taken on Frequent Flyer Ride (*WayTooHigh.com)

Recent merchant interchange fee increases were linked to frequent flyer reward card programs. The rates were increased when cardholders used their affinity frequent flyer-linked cards.

However, if you are late paying a single monthly credit card bill, the card company can confiscate all your accumulated frequent flyer mileage accrued on your account

The question?

Even though merchants are paying more when honoring affinity reward cards, if the cardholder is forced to return all the mileage, does this mean that the business gets a refund too? Alter all, we paid a premium and if the cardholder is precluded from using those miles, shouldn't the retailers get a refund?

The inequity does not end with affinity cards. Just this past weekend, during a hotel visit, a credit was issued to our account for certain charges. a refund for the taxes were applied, but when merchants issue credits on a charge card, their are no interchange fee refunds.

Example: If a furniture store sells a $10,000 living room set and the customer returns it, the retailer is forced to still pay the interchange fee even though the items were returned. Forget "restocking" costs, how about interchange fee costs on returns, especially during the holiday season.

[Source: WayTooHigh.com]

"Dreamgirls" Dream-on (WayTooHigh.com)

Not sure if our international readers will understand this, but, in the States, the biggest theatrical release this holiday season will be Dreamgirls. Within the next few weeks all the buzz will be swarming around this film. The story is about the price people pay for fame. We only hope they are not charging it to reach their glory because the dream can become a nightmare.

Earlier today we read a commentary [Albany Times Union] about how "interchange fees are transparent to merchants." Just the headline seemed to be wishful thinking.

Transparent?

Merchants and cardholders have little or no idea that this is a $30 billion dollar windfall that the banks and the two leading card associations have been controlling for decades. If they want "transparency" post the exact charge on every cardholders receipt.

The head of this one-year old advocacy group [supported by the banks, payment card networks - (i.e. Visa & MastercCard?) and their trade associations] explained that "merchants receive extraordinary benefits from accepting electronic payments." This might have been news if the commentary was authored by a retailer, but, by their Washington, D.C. policy and advocacy tool. And for all that money, we would have thought Mr. Madigan could have garnered greater pickup for his "commentary" than having it appear in an Albany, NY paper.

We wonder whether a similar editorial was published in the late 1800's when the railroad cartel forced farmers to pay whatever rates they imposed for the benefits derived from transporting their goods to market. Without the railroads carrying their goods to market they would have been out of business - the produce would have rotted.

Today, Visa® and MasterCard® control a staggering 80% monopolistic share of the electronic payment market. Their market power parallels the characteristics of the railroads which also stood accused of forcing secret price agreements to control their market.

Fast forward to today: because we have been invited to address the International Consumer Electronics Show next month in Las Vegas, we think this forum [the largest trade show in the U.S.] will be an ideal venue to learn just how transparent interchange fees are. January 9th and our panel discussion boasts an ideal opportunity to spotlight why retailers and consumers are battling Visa and MasterCard.

[Commentary: WayTooHigh.com]

Credit Card Branding Confusion (WayTooHigh.com)

With the holiday retail season in full swing, some newly co-branded Visa® and MasterCard's® are a giant headache for retailers. Just today, one of our retail photo customers presented us with her credit card. It was a store card from Gap Inc. and the electronic processing terminal declined the transaction. The customer then presented us with her Nordstrom's card, which did have a Visa imprint on the front. Without close inspection, it was challenging to differenciate the two.

Why is this important?

While the Gap card was without interchange charges, the Nordstrom's Visa co-branded card cost us the signature interchange rate.

Even Cardholders are Perplexed by Debit vs. Credit Cards (WayTooHigh.com)

[Commentary: WayTooHigh.com]

Sixty-percent Rate Cut in 2008 by MasterCard Europe (Commentary, WayTooHigh.com, via WSJ)

Those are some rich margins!

Imagine if you owned a retail shop and announced that you were slashing prices by 60 percent? It would mean one of two things; either your merchandise did not sell during the holiday season, or you are preparing to close shop. In the case of MasterCard Europe®, their announced 60% interchange fee reduction on Maestro® debit card payments made in the euro zone certainly does not suggest a weakened company. Instead, it enhances the argument that interchange fees currently are way too high. They are way too high in Europe, they are way to high in Asia, they are way too high in Australia. They are way too high across the globe, especially in the U.S., which faces among the steepest interchange fees for any leading industrialized nation.

However, before consumers and merchants in Europe prepare to celebrate, according to The Wall Street Journal Reporter, Anne Jolis, the lowered bank fees are more than a year away.

How many more billions will be generated until the fee reduction takes hold in January 2008?

Why the delay of a year?

We assume that Visa International's® legal and public relations teams are speedily preparing a similar announcement as both card associations share many of the same member banks.

With no PIN-based debit card interchange fees in Canada, it seems that MasterCard has room for enhancing the rate reduction by another 40 percent.

If the gas companies can lower and raise prices at the pump with the flick of a switch, the banking cartel surely can lower rates now. Why wait until 2008?

Why cut interchange fees by 60% only on debit-cards and not on credit cards? Remember, MasterCard and Visa® encourage cardholders to posses debit cards, but use it at the much higher interchange fee structure that accompanies credit cards in order to validate their sweepstakes and other contest schemes.

Does this mean that MasterCard Europe will spend the next year encouraging those with debit cards to instead use the cards as traditional credit cards and thus bill merchants at the much higher rates?

And, the biggest question: Why only cut debit card fees by 60 percent in Europe?

We sense this appeasing concession by MasterCard Europe is designed to partly placate the expected ruling by the European Commission. While MasterCard Europe's white flag is hoisted in the air, the two leading card associations' alleged price-fixing transgressions have already occurred. Moving forward, this is a nice first step, but their pricing scheme and restraints on competition have a long history of alleged antitrust violations.

As reported in The Wall Street Journal (Dec 5, Page E2), "The commission says MasterCard Europe and its Maestro debit card account for about 45% of all payment cards issued in Europe. In 2004, a total of 23 billion payments, with a value of €1.35 trillion, were made in the EU with credit and debit cards."

[Commentary: WayTooHigh.com, via WSJ]

"MasterCard Europe Publishes Sepa Interchange Rates" (Finextra.com)

"Mastercard Cuts Euro Zone Interchange Fees for Maestro Payments" (AFX News)

New Hampshire Parking Meters Accept Plastic (via Union Leader)

Last month, Boston, now Manchester, NH.

According to the Union Leader, new parking [kiosk] meters in Manchester N.H. are accepting Visa® and MasterCard® electronic payments for as little as a nickel's worth of leased space for your car - six minutes at the meter. From what we gleaned, the city might have wanted to imposed a one-dollar minimum for electronic payments. However, it seems that the recent parking meter fiasco in Boston - where they also abandoned plans for enforcing that minimum charge card limit has now been imposed.

What happens when a motorist enters their Visa card so they can run into the corner shop for just a minute? The Union Leader reported that "[the] transaction processing fees have been reported to be as high as 18 cents on the dollar." How can the city recoup its nearly million-dollar investment after the fees to Visa and MasterCard are paid?

"[Boston] Halts Use of Credit Cards at New Meters" (via The Boston Globe)

Boston Strangled by Interchange Rules (WayTooHigh.com)

[Source: WayTooHigh.com via Union Leader, Dec 4]

[REPOST] The Two Sides of Wells Fargo® - Some Non-Profits Pay Upwards of 5% for Interchange Fees (WayTooHigh.com)

Seventy-two pages, five-pages or one line? (WayTooHigh.com)

[REPOST, Nov 4, 2006]

Sample Transparent Credit / Debit Card Receipt

To liberally paraphrase Oliver Wendell Holmes Jr. who said, "a page of history is worth a volume of logic," posting the exact merchant interchange fee (sample below) on all charge receipts is worth a volume of confusing fee schedules cloaked within dozens and dozens of website pages.

The two leading card associations now post their fees for review; there are from five to seventy-two respective website pages to identify their rates.

Isn't the below unadulterated sample receipt more guideless and simple to understand?

30 MINUTE PHOTOS ETC.

92 CORP. PK PL

IRVINE, CA 92606

TERMINAL I.D.:................... 000000000

MERCHANT #:............. 00000000000000

VISA *

453232

SALE EXP:................................... 08/09

BATCH: 0043523....INVOICE: 22545612

DATE: NOV 2, 06.............. TIME: 11:42

RRN: 00000000........AUTH NO: 0211190

Interchange Fee:.... $8.26

TOTAL...................$485.66

GENERAL MERCHANDISE 05

30 Minute Photos Etc.

X_____________________________

I AGREE TO PAY THE ABOVE TOTAL AMOUNT

ACCORDING TO CARD ISSUER AGREEMENT

(MERCHANT AGREEMENT IF CREDIT VOUCHER)

[Source: WayTooHigh.com]

Growing List of Reasons to Lower and End Interchange Fees (WayTooHigh.com)

[REPOST from Oct 9, 2006]

Seemingly, the banks’ formula is to create an ocean of control. One retailer quipped that Visa® and MasterCard’s® motto should be: there are three certainties: death, taxes and rising interchange fees.

Even so, technology today speeds up everything including lines at airports. New advanced technology programs geared towards frequent flyers even help limit security check-point inconveniences.

At home, technology is speeding up our lives too. Those one-hour television series are now just over 30-minutes with TiVo. I tune into a program half way through, start the TiVo playback and speed through the show, allotting more time to edit WayTooHigh.com.

These efficiencies are everywhere except when it comes to merchant interchange fees.

A recent Forbes Magazine (Oct. 16, p 18) study of Silicon Valley identified that in just 50-years the storage capacity on a computer’s hard drive went from 2,000 bits to 421 billion bits on a square inch. As speed went up, prices went down, but not apparently when it comes to electronic payment transactions.

Another example of efficiency: Apple is introducing a new consumer service for downloading digital movies in minutes for a few dollars - then again, that is prior to adding Visa® and MasterCard’s® take for online ordering.

Has anyone heard Starbucks blame fraud as a justifiable reason to increase the fees on their highly accepted gift cards? They even linked up with CoinStar and technology to easily transfer consumers' change into plastic Starbucks gift cards in seconds and with no added charges or "convenience fees," - as you would expect from TicketMaster. Like all gift cards, at Starbucks, there are no added payment charges and certainly no interchange fees, even though there are technology costs associated with this program. And, the last thing anyone expects to hear is that Starbucks is facing financial woes due to the electronic transaction costs from its gift cards; rather it has been a rich financial boon to the company.

Albert Einstein's quote: "The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing," is a wake up call beyond geo-political issues, but for all activists. The passion to stand up for justice reaches all areas.

For retailers and consumers, there are those who just accept a $30 billion dollar annual bank payday at our expense, and then there are those doing something about it. As lead plaintiff in the merchant interchange litigation, we are striving to be among those who do not just look on, but act to remedy a massive injustice.

Unceasing and interchangeable excuses provide fodder for more fee increases by the banks; they are now planning for MasterCard's® rate increases next week.

Rhetorically, we wonder why even gas prices are coming down, yet interchange fees are rising? Is it that the banks’ cartel is even more powerful than OPEC’s?

The fuel price increases from months ago were attributed to many causes; at one point it was China and their mountainous consumer spending. That was the reason provided for pressure on many commodities, from fuel, gold and copper. I wonder why the banks did not also attribute their rate increases that will arrive next week on China too, or did they?

In our photo business, technology has changed our entire industry during the transition from photographic film to digital imaging. Our high-speed Kodak photo scanning brought down our price from $5.00 per picture scan to as low as 5-cents in just a few months. Technology and the use of new products like the Toyota Prius are helping to soften gas prices even more. We guess lower gas prices had more to do with the Prius than the credit card associations’ price at the pump cap gimmick.

Last weekend, during another photo conference which I addressed in Minneapolis, retailers were steaming mad at the latest round of merchant fee increases. Business owners wanted to know why there were new fee increases and what they could do to interrupt this immeasurable orgy of rate increase madness.

Entrepreneurs and all-sized businesses want to own and control their companies. But, with unremitting interchange fee increases that are forced upon us without negotiating, we are working for the banks. When other supplier’s raise their rates we can call to level concern and even arrange to go elsewhere. However, with MasterCard® and Visa®, its other partner which is also owned by many of the same banks, they dominate with a planetary-sized 80% share of the market.

Beyond technology, a study of other nations' electronic payment fees helps empower the argument for lower or even no fees.

Write a check and the interchange fee is zero.
Use a PIN-based debit card in Canada and the interchange fee is zero.

More background, click here

[Commentary: WayTooHigh.com]